The Nation Newspaper

Tag: Insurance

  • Insurance directory coming

    A  MEDIA group, Inspenonline, has got the nod to produce a directory for the insurance industry.

    The supporters include the National Insurance Commission, and Nigerian Council of Registered Insurance Brokers (NCRIB).

    The Project Consultant, Mr Nnamdi Duru, said the project would benefit operators as their services would be brought close to the public who in time past have been defrauded by fake operators due to inadequate information of registered operators in the industry.

    The Editor of the group, Mr Chuks Okonta, said the production of the directory has started.

    He said the project became necessary due to low level of awareness about insurance operations in the country. He noted that the project when completed would bring insurance closer to the public and help stem the rate of fake insurances, which often occur due to inadequate knowledge of locations and names of organisations operating in the industry.

    He noted that a recent study by GIZ, a German agency for sustainable development and Riskguard-Africa Limited, has revealed that no fewer than 15 insurance firms in Nigeria are known by the public.

    “The project would help the public to access with ease information of the various arms of the industry,” he said.

  • Roche drives cancer drug sales with insurance

    Roche Holding AG (ROG) has found a way to sell cancer drugs to millions in China who couldn’t otherwise afford them.

    The world’s biggest maker of tumor medicines is getting together with re-insurer, Swiss Re, to sell a Swiss-engineered private insurance that’s on track to garner 10 million clients this year, says Harald Sprenger, Roche’s director of private insurance and market-access strategy in China. Both partners expect a 20 per cent enrollment jump next year.

    Roche Holding AG Chief Executive Officer Severin Schwan said, “We’re creating a market” in China.

    The collaboration between Roche and Swiss Re, the world’s second-biggest reinsurer, is carving out a new business in China for private insurance aimed at cancer, a disease blamed in more than a quarter of the country’s deaths. Advanced tumor medicines can cost about 10 times an average Chinese person’s income.

    “We’re creating a market” in China, Roche Chief Executive Officer Severin Schwan said in an interview. “The biggest hurdle in emerging countries is access.”

    Roche of Basel, Switzerland, provides health data needed to set up the policies. Swiss Re (SREN), based in Zurich, does the statistical heavy lifting and then re-insures local insurers who sell the policies. So far about 6 million people have enrolled, Sprenger said in an interview. The goal is to have 12 million by the end of next year.

    “The old theory was that there are only two segments: there’s the rich, who can afford it, and there’s the poor who cannot afford it at all,” Schwan said in the interview in Paris. “Now what you have is an emerging middle class. This emerging middle class is able to make a contribution.”

    The cost of the insurance can range from about $50 a year for a basic product to several thousand dollars for the most complete coverage, according to Swiss Re.

     

     

     

     

  • NAICOM targets MfBs for micro insurance market

    NAICOM targets MfBs for micro insurance market

    Plans are afoot to use microfinance banks(MfBs) as channels of developing micro insurance market and further generate more deals for the industry, it was learnt.

    The National Insurance Commission (NAICOM) is discussing with the management of microfinance banks to achieve this goal.

    The insurance regulatory body is leveraging on the 20million potential customers of microfinance banks to sell insurance products and further rake in billions of naira in premiums.

    NAICOM’s Director-General, Mr Fola Daniel, said efforts were being made to promote micro insurance to a level that would raise the earnings of operators.

    He said aside cooperative societies, microfinance banks are among the channels the corporation intends to use in selling micro insurance because they are closer to the grassroots. He said micro insurance clients would be reached through microfinance banks.

    Daniel stressed that with the micro insurance guidelines, poor Nigerians could buy insurance at a cheaper rate.

    The Chairman, National Association of Microfinance Banks (NAMBs), Southwest Region, Mr Olufemi Babajide said the decision of NAICOM to use microfinance banks to sell insurance policies to small savers is a good development to the industry. He said this would provide mutual benefits to the parties involved in the partnership.

    He said banks have a bigger market, strength, among other things,to make the idea of selling micro insurance policy a reality.

    He said: “We have our population, and that is a credit to the banks, especially in pushing such products in the market.”

    He said insuring the credits of the banks, is pertinent to the success of the banking sub-sector.

    According to him, NAICOM should be able to ensure that the banks’ credit risks, such as savings and loans, are insured for growth.

    Babajide said the major problem facing the banks is credit risk, adding that the banks would minimise its risks as much as possible if their credits are insured by the insurance companies.

    “What we are saying is that the issue of insuring our credits is important to us as well. NAICOM, though its operators, need not run away from risks to make the arrangements workable. The essence of insurance is risk,” he added.

  • ‘Micro insurance useful for risks management’

    ‘Micro insurance useful for risks management’

    The Commissioner for insurance, Mr Fola Daniel, has advised low income earners to use micro insurance products to manage their risks.

    He gave the advice at a workshop organised by the commission for stakeholders on developing micro insurance in Nigeria in Abuja.

    NAICOM has identified micro insurance as one of the financial instruments that could help in taking the challenges of poverty and other socio-economic burdens facing millions of Nigerians off them.

    Daniel described micro insurance as a market-based mechanism that promised to support sustainable livelihood by empowering people to adapt and withstand the stress.

    According to him, the Vision 20: 2020 described the insurance sector as ‘grossly untapped opportunity with low attendant of market penetration’.

    He attributed the development to sundry reasons, such as the nation’s peculiar environment, limited awareness and the prescriptive nature of the insurance Act 2003 as well as negative public perception by those who are unaware of insurance.

    The Commissioner said: “From empirical findings, it has been proved that low income earners can use micro insurance where it is available, as one of several tools to manage their risks.

    “It is, therefore, expected that the insurance industry would leverage and key into this sector by developing the needed micro insurance products and services tailored to support, protect and assist the low income populace to alleviate poverty.

    “Let me state clearly that micro insurance has been specifically designed for the protection of low income earners against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved.

    On the purpose of the workshop, which was organised with the commission’s partners, including GIZ of Germany, Access to insurance Initiative, Making Finance work for Africa and International Labour Organisation, the insurance expert said the objectives of the workshop were to access the findings and recommendations of the country-wide diagnostic research on micro insurance and to provide a platform for further in depth discussion among various stakeholders.

  • Brokers to partner agents on micro insurance

    Insurance brokers initially opposed to the revival of the agency system introduced by the National Insurance Commission (NAICOM) are ready to work with the agents.

    A source, who asked not to be named, said brokers were working out ways to partner agents to harness the enormous micro-insurance opportunities at the grassroots.

    NAICOM introduced the agency system to expand the insurance market and to bring its services and benefits nearer to a greater percentage of the population.

    A source at the Nigerian Council of Registered Insurance Brokers (NCRIB) said some brokers were looking at how they could partner, or synergise with some agents. He added that the brokers were looking at how they ccould integrate the agents under their brand to reach the grassroots.

    Worried by the untapped micro-insurance opportunities, put at over N60 billion, NAICOM said it was working on a draft guideline for the entrenchment and development of the business.

    Commissioner for Insurance Fola Daniel said the draft guideline on micro-insurance was being exposed to the industry, experts and other stakeholders for their input and contributions. He said, thereafter, the final draft would be drawn and released to the market.

    He said the commission intended to collaborate with other regulatory agencies in achieving the plan.

    He said: “To underscore our commitment to the development of micro-insurance, the commission has conducted a nationwide diagnostic study on micro-insurance in collaboration with GIZ, a German agency for sustainable development, Access to Insurance Initiative (AII) and local consultants.

    “We have also put in place a draft guideline for micro-insurance business. The draft is being exposed to the industry, experts and other stakeholders for their inputs and contributions before the final draft will be drawn and subsequently released to the market,” he said.

    Daniel noted that the initiative is part of the commission’s drive to open up and develop the insurance market at the grassroots, and, by extension, increase the sector’s contribution to the Gross Domestic Product (GDP).

     

  • ‘Insurance contributes only 0.7% to GDP’

    ‘Insurance contributes only 0.7% to GDP’

    The insurace sector contributes 0.7 per cent to the Gross Domestic Product (GDP), a Consultant to the World Bank, Vyasa Krishna Burugupalli, has said.

    Burugupalli, who spoke at a forum organised by nchor Insurance Company Limited,in Lagos, said the Nigerian insurance market is largely untapped, adding that with over 150 million people, Nigeria has an insurance density of just about five to 10 per cent.

    He said in some other developing countries, insurance density is 40 -50 per cent; in the developed economies, it is as high as 90 – 98 per cent.

    Insurance, he said, can contribute significantly to the economic development of Nigeria as it is being witnessed in the developed world, if practitioners will lay emphasis on customer service delivery.

    Burugupalli, who is Country Director, Micro Ensure, India, and Consultant to Price Waterhouse Coopers in Sri Lanka for a World Bank/IFC project, was presented by Kunle Aduloju, a Senior Lecturer, Department of Actuarial Science and Insurance, University of Lagos.

    He said in the lecture, entitled: “Agriculture and micro insurance: A new vista for deepening insurance penetration in Sub-Saharan Africa,’’ despite the effort of the National Insurance Commission (NAICOM), insurance penetration in Nigeria remains one of the lowest in the world.

    He said exploring micro agric insurance remains about the best option if Nigeria is to record any appreciable level of insurance penetration soon, adding that agriculture, as the mainstay of the economy, contributes about 45 per cent of GDP.

    He stated that the agric sector employs about two-thirds of the country’s total labour force and provides a livelihood for about 90 per cent of the rural population.

    He said 75 per cent of Nigerians live in rural and semi-urban area, a ready-made market for micro insurance to thrive, so with 150 million people, the largest in Africa, and a fast-growing economy, taking insurance to them is the right way to go, he said.

    “Microinsurance simply put is a low premium approach to insurance for those at the bottom of the pyramid, that is the poor. The innovative part of microinsurance is that it reaches an area of the population that is still deemed ‘unbankable’ or physically unreachable to the normal banking or conventional insurance activities.

    “Micro-insurance is the ‘protection of low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved.

    The guest lecturer said development institutions, such as the World Bank and the United Nations, see in it a potential to secure poverty reduction. He listed risks covered by micro-insurance to include: crop micro insurance, livestock micro insurance, life micro insurance and health micro insurance. Others are disability micro insurance, property micro insurance and health micro insurance.

    Comparing the traditional with the micro insurance, Burugupalli, said: “In equivalence with regular insurance, the central underlying principle is the pooling of risks, which implies that financial contributions are collected from the members of an insurance scheme, and the loss of one individual is spread among all members in case of risk occurrence.”

    The main difference between micro insurance and regular insurance, he explained, was that the former isw targeted at low-income people, who have limited financial resources and often irregular income flow.

    He said the Food and Agriculture Organisation (FAO) has indicated that five billion people live in developing countries, out of which 57 per cent live in rural areas, adding that 49 per cent of these rural dwellers are employed in agriculture.

    He said the number of micro-insured people was estimated at 78 million, which is not a particularly high number, given that China and India are both among the 77 countries. The lecturer explained that due to the high population numbers in these two countries, the Asian region accounts for 86 per cent of the global outreach of micro-insurance. He said only 2.7 per cent of the poor population in Asia was covered by micro-insurance, while the coverage of the poor in Africa and Latin America was 0.3 per cent and 7.8 per cent.

    This low coverage is reflected in the level of penetration (premiums in per cent of GDP) and density (premiums per capita).

    He said in a world survey of insurance density, out of 78 countries analysed, South Africa ranked 32, Namibia ranked 44, Angola ranked 74, Kenya ranked 82, while Nigeria ranked 86.

  • Benefits of micro-insurance products listed

    Benefits of micro-insurance products listed

    Concerted efforts in the development and introduction of micro-insurance products will go a long way to create insurance awareness among Nigerians, Acting Director – Inspectorate, NAICOM, Mr. Emmanuel Farinu has said.

    He was presenting a paper on how to develop the insurance industry. The forum was organised by the National Insurance Commission (NAICOM).

    Farinu said micro-insurance is accessed by the low income population, provided by a variety of different entities and run in accordance with generally accepted insurance principles.

    The International Association of Insurance Supervisors (IAIS) defines micro-insurance as: “The protection of low income people against specific perils in exchange for regular premium payments appropriate to the likelihood and cost of the risk involved.”

    Farinu said micro-insurance involves low level of premium. “It is insurance with small benefits, simple, easily understood contracts unlike the complex nature of the conventional insurance,” he said.

    He said quite a number of products are offered under the micro – insurance scheme, some of which are: life and savings, health and disability insurance as well as agriculture and livestock insurance. Others include: index based crop insurance, funeral insurance, property insurance, credit insurance/loan protection and packaged policy.

    Explaining the different types of micro- insurance, Farinu stated that for one who took the life and saving insurance, at death, the deceased’s beneficiary will be paid the amount held in the savings plus benefits.

    The health and disability policy is to enable the poor cover the cost of medicine, hospital stay and treatment as well as protecting against the loss of income due to sickness or injury while the agriculture and livestock insurance is to protect against losses associated with cattle rearing, piggery, poultry, fish farming and other types of farming.

    Farinu explained that Index based crop insurance is for protection against adverse weather conditions while the funeral insurance cover the cost of burials. Property insurance, he explained, replaces assets lost due to theft, damages or destruction. Property damage could result from fire, flood or other natural disasters, he stated. For credit insurance /loan protection, he explained that it is meant to

    “To prevent people from becoming poor due to illness, natural disaster, lack of savings, or loss of assets or livestock, developing Countries must invest in micro-insurance. Micro-insurance focuses on helping people from falling into poverty traps on their way to the middle class”.

    The Commissioner for Insurance, Mr Fola Daniel, said insurance penetration in Nigeria was not more than five per cent compared with 15 per cent and above in some African countries, including South Africa.

    A study conducted by the combined team from GIZ, a Germany agency for sustainable development, and Riskguard-Africa Limited revealed that less than 25 percent of insurance companies operating in the country are known by Nigerians.

    This clearly shows the level of apathy among Nigerians to the insurance sector.

     

     

     

     

  • NAICOM ‘forces out N1.22bn claims from insurance firms in six months’

    NAICOM ‘forces out N1.22bn claims from insurance firms in six months’

    The National Insur-ance Commission (NAICOM) said its Complaints Bureau facilitated the settlement of N1.2 billion claims by insurance companies in the first half of the year.

    In a statement in Abuja at the weekend, the commission said the payment involved 52 cases concluded by the bureau during the period.

    It said during the period, the Complaints Bureau dealt with 349 cases and held four adjudication meetings.

    Of the number, 86 cases were fresh complaints. The remaining (263) were existing/ongoing cases.

    The statement said outstanding claims were currently receiving the attention of the commission and assured the insuring public of quick resolution of issues.

    The industry regulator noted that it was “no longer business as usual’’ with insurance firms, considering that there had been remarkable improvement on compliance with the commission’s directives”.

    “Consequently, not less than 85 per cent of the insurance institutions responded to queries or directives issued to them for claim settlement during the period.

    “Majority of the 15 per cent residual are largely claims already before courts of competent jurisdiction and therefore prejudicial for the commission to intervene,’’ the statement said.

    It noted that complaints received during the year were mainly those involving non-settlement of claims on motor insurance, marine, life, bond Issues and pension matters.

    It added that complaints were also received from individual policy holders, beneficiaries and government agencies, such as SERVICOM, Legal Aid Council and Public Complaints Commission.

  • Access Nigeria, World Bank partner

    world-bank

    Access Nigeria in collaboration with the World Bank have concluded arrangement for a two-day National Jobs Fair.
    The fair commences tomorrow at the National Theatre, Iganmu Lagos.

    In a statement, World Bank said the event will serve as platform for the organiSations and potential employers to recruit young, skilled and competent employees into their workforce.

    “A broad range of employers from various sectors of the economy such as Information & Communication Technology (ICT), Telecommunications, Banking, Insurance, Private sector, Media, etc. are expected to participate at the event,” it said.
    The World Bank had in 2010, supported Access Nigeria programme during which Skills Gap Analysis conducted showed a distinct gap between what employers need and what they end up getting. It was discovered that most youth lack the fundamental skills required to succeed in the labour market, such as communication skills, cognitive skills and computer skills. This insight led to the formation of the Access Nigeria skills programme.

    The programme has in the last two years assessed more than 3000 youth on globally-benchmarked fundamental skills for Information Technology-enabled services economy.

  • Expert advocates livestock insurance

    The widely reported deaths of cattle has highlighted the need for livestock insurance cover for farmers, an  expert, Professor  Abiodun Adeloye   has said.
    Adeloye, who is of the Department of Animal Production, University of Ilorin, said   farmers need to think about the protection their insurance gives them.
    According to him, accidents are “standard perils”, which should be covered by farm insurance.
    Such losses, he noted, highlighted significant problems for farmers with commercial livestock, sheep and cattle. Considering how commonplace these events are, Adeloye said farmers need livestock insurance to feel better protected.
    The idea with the livestock insurance, he said is to help farmers who lose their animals to severe drought conditions as they often do, to receive monetary compensation to either allow them to restock faster, invest in other productive activities or even purchase food and other items of necessity.
    He said livestock insurance aims to help protect pastoralists against the full impact of drought-related losses. As livestock are both a principal asset and source of income for farmers, he  advised  the  government  to  provide  data on livestock mortality to allow insurance contracts to be appropriately  designed.

    According  to him, the   insurance  programme  will  focus on reducing the vulnerability farmers   face. Such programmes, he explained encourage productivity and returns from livestock-based livelihoods.

    Climate extremities,Adeloye  noted  pose the greatest risks to agricultural production,  harming  and killing  livestock.

    He said livestock insurance was of one of the ways to manage weather-related agricultural risks and that insurance products represent a promising and exciting market-based option for managing climate-related risks faced by poor and remote populations.
    Farmers ,who use  money  to purchase livestock face two risks at once: losing them due to disease and failure of investment. According  to him, they  would like to reduce the uncertainty. For  watchers, the  problems that  will  plague  suppliers of livestock  insurance  service  will be  limited availability and low reliability of data concerning livestock mortality. Thus, all investigated schemes calculated their premiums on very limited data. This leaves the insurer with a great risk of setting the premiums too low and thus endangering its financial sustainability.